Member benefits

Glossary of Terms


Accidental Death Benefit Rider 

An extra benefit which generally equals the face amount of the policy. This benefit is payable in addition to other benefits in the event of accidental death.

Advance Premiums

Collected premiums which pay the coverage beyond the next policy anniversary. These, plus interest, must be counted as a liability for valuation purposes.

Age, Attained Age

The insured's age at his or her last birthday.


A stipulated sum payable at certain regular intervals during the lifetime of one or more persons, or payable for just a specified period.


A form supplied by the insurance company, usually completed by the member. The form is signed by the member and is part of the insurance contract if a policy is issued. This form allows the home office to determine whether an insurance policy will be issued, and if so, in what classification and at what premium rate.


The legal transfer of ownership rights under a life insurance policy from one person to another. Also, the document effecting the transfer.

Automatic Premium Loan

An option in a life policy authorizing the insurer to use the cash value to pay any premiums still due at the end of a grace period.

Basic Accidental Death Benefit

A contract which automatically provides all NALC members a determined benefit in the event of accidental death.


The person, or persons, designated by the insured to receive the benefits of an insurance policy upon his or her death. In health insurance, the beneficiary is the person designated to receive any accidental death benefit.


The amount payable by an insurer to a claimant or beneficiary under each coverage in the policy


The notification of premiums due on an insurance policy.

Cash Value or Surrender Value

The amount available to the owner when a policy is surrendered to the company. During the early policy years, the cash value is normally the reserve less a "surrender charge". In the later policy years, the cash surrender value usually equals or closely approximates the reserve value at time of surrender.

Certificate (of Insurance or Participation)

The written contract between a fraternal society and the member purchasing the insurance, stating the terms and full details of the agreement. Also, a certificate issued to a group policyholder which summarizes the essential features of the insurance protection provided.


A demand by an insured or beneficiary for the benefits provided by the contract.

Contestable Clause

A provision in an insurance policy setting forth the conditions or the period of time which the insurer may contest or void the policy. After that time has lapsed, cannot be contested.

Contingent Beneficiary

An alternate beneficiary designated to receive payment usually in the event that the original beneficiary has died before the insured.


The agreement by which an insurer agrees, for a consideration, to provide benefits, reimburse losses or provide services for an insured. A "policy" is the written statement of the terms of the contract.

Contract of Insurance

The contract whereby an insurer agrees to indemnify an insured for losses, provide other benefits, or render services to or on behalf on this insured. The contract of insurance is often called an insurance policy, but the policy is merely the evidence of the agreement.


The change of one policy form to another, usually without evidence or insurability. This usually refers to life or health insurance contracts.

Conversion Privilege

The right of an individual to convert a group health or life policy to an individual policy, should the individual cease to be a member of the group. This can usually be done without a physical examination.


A policy that may be changed to another form by contractual provision without evidence of insurability.

Convertible Term

A term contract that can be converted to more permanent forms of insurance without medical examination. The conversion must be made within a limited period as specified in the contract. The conversion may be made as of the original date of issue, provided the insured pays the difference in back premiums with interest thereon, or as of the attained age of the insured at the time of conversion.

Death Benefit Corridor

According to federal tax law, a death benefit may not be less than a minimum percentage of the account value as of the date of death. The corridor varies from 250% to 101%.

Decreasing Term Insurance

A form of life insurance that provides a death benefit which declines throughout the term of the contract, reaching zero at the end of the term.

Deferred Annuity

An annuity contract that provides for the initiation of payments at some designated future date.


An insured's spouse and children who meet certain eligibility requirements, and who are not otherwise insured under the same policy.

Delinquent Notices

Past due reminder notices sent to policyholders before the policy is canceled or suspended.

Dependent Coverage

Insurance coverage on the head of a family which is extended to his or her dependents, including only the lawful, spouse and unmarried children who are not yet employed on a full- time basis. "Children" may be step, foster, and adopted, as well as natural. Certain age restrictions on children usually apply.

Direct Pay Monthly

A payment option where the policyholder pays premiums directly to the insurer on a monthly basis.

Direct Pay Annually

A payment option where the policyholder pays a year's worth of premiums to the insurer on the anniversary date of his or her policy.


A physical or mental condition which makes an insured person incapable of performing one or more duties of his or her occupation.

Disability Waiver Premium Benefit

A disability benefit which provides that a policy of life or health insurance will be continued in force without premiums during any period in which the insured is disabled as defined in the policy


A dividend on participating contracts is the refund of that part of the premium which still remains at the end of a year after the company has set aside the necessary reserve and made deduction for claims and expenses. The dividend may also include a share in the company's investment, mortality and operating profits.

Dividend Accumulation

A life insurance policy option which allows the policy holder to leave any premium dividends with the insurer to accumulate at compound interest.

Dividend (or Paid Up) Additions

An option whereby the insured can leave dividends with the insurer, and each dividend is used to buy a single premium life insurance policy for whatever amount it will purchase. Often called "paid up additions."

Dividend Option

Alternative ways in which insureds under participating life insurance policies may elect to receive their policyholder dividends.

Effective Date

The date on which insurance coverage goes into effect. May refer to a case, contract, coverage, benefit or an insured. The definition of this term varies from company to company.


The changing of provisions in a policy or certificate by means of an official entry over the signature of an insurance company officer.

Evidence of Insurability

The statement of information needed for the underwriting of an insurance policy.


Specified conditions or circumstances for which a policy does not provide benefits.

Extended Term Insurance

A provision in most whole life policies which provides the option of continuing the existing amount of insurance as term insurance for as long a period of time as the contract's cash value will purchase. This is one of the nonforfeiting options available to the insure in case a premium is not paid within the grace period.

Face Amount

The amount of insurance protection provide under a given policy. The actual amount payable by the company may be decreased by loans or increased by additional benefits payable under specified conditions, or state in a rider.

Grace Period

A determined period, usually 30 or 31 days after the premium due date, during which an insurance contract remains in force and the premium may be paid.

Group Certificate

A document provided to each member of a group plan. It lists the benefits provided under the group contract.

Group Contract

A contract of insurance, made with an employer or other entity, that covers a group of persons. The group contractual arrangement is generally used to cover employees of a common employer, members of a trade association or trusteeship, members of a welfare or employee benefit association, members of a labor union, or members of another association not formed for the sole purpose of obtaining insurance.

Group Life Insurance

Life insurance provided for members of a group. The cost of this insurance is lower than individual policies because administrative expenses per life are decreased.

Guaranteed Renewable

A policy that the insured has the right to continue in force by the timely payment of premiums over a substantial period of time. During that period, the insurer has no right to make any change in any provision of the contract other than a change in the premium rate for all insureds in the same class.

Income Policy

A life endowment policy which provides the payments of proceeds in specified monthly amounts. This is an alternative to a lump sum payment.

Incontestable Clause

A clause in a policy providing that after a policy has been in effect for a given time (2 or 3 years), the insurer shall not be able to contest the statements in the application.


Benefit paid by a policy to the limit of the insured loss.

Installments for a Fixed Period

A settlement option whereby the insurer pays a monthly or annual income for a fixed number of installments.


The person who is covered for insurance under a policy.

Irrevocable Beneficiary

A beneficiary who cannot be changed without his or her consent.

Juvenile Insurance

Insurance written on the lives of children under a specified age. This insurance is usually owned by a parent or parents.


Termination of a policy due to the failure to pay the premium.

Left on Deposit Dividends

An option providing for a policy owner's dividends to be deposited with the insurer at a determined interest rate.

Life Annuity

A settlement option whereby the insurer pays a beneficiary a monthly income for the rest of his or her life.

Life Annuity With Period Certain

A settlement option whereby the insurer (1) pays the beneficiary a monthly income for life, and (2) pays that monthly income to a survivor until the end of a specified period, if the insured dies within that period.


Amount borrowed from the insurance company secured by the value of a policy.

Lump Sum

Payment of the entire proceeds of a life insurance policy in one sum.


A policy matures when its face amount becomes payable. This could occur upon the death of the insured or as of specified dates.


The use of oral or written statements that do not truly reflect the facts. Misrepresentation can be given either by an insured on an application or by an insurer concerning their terms or benefits of an insurance policy.

Named Insured

Any person, firm, or corporation, or any member thereof, specifically designated by name as the insured(s) in a policy.


A plan or program of insurance, usually group, for which the employer pays the entire premiums and the employee contributes no part of the premium.

Nonforfeiture Values (or Provisions)

Those values in a life insurance policy that by law the policy owner cannot forfeit, even if he or she ceases to pay the premiums.


Any adult policy is owned by the member whose life it insures. The person named a "owner" has full control of the policy.

Options at Lapse

If a premium remains unpaid at the end of a grace period, the options at lapse provision is exercised. This means a policyholder may surrender the policy for cash, continue the policy as reduced paid-up life insurance, or convert the policy to nonparticipating extended term insurance.

Paid-Up Insurance

Insurance on which all premiums are paid, but which has not yet matured by either death or endowment.

Paid-up Policy

A life insurance policy under which no further premiums are payable but under which the insurance coverage continues in effect.


A person covered under a group insurance plan.


Insurance that pays policy dividends to policy owners.

Participation Certificates

A certificate given to members who have contracted for supplemental coverage under a group plan.

Payor Benefit

A rider or provision often found in juvenile policies under which premiums are waived if the person paying the premium, usually one of the parents, becomes disabled or dies while the child is still a minor.

Payroll Deduction

A payment option which automatically deducts insurance premiums from a policyholder's paychecks.

Pending Claim

A reported claim on which final action has not yet been taken.

Pending File

Records of policies not yet issued.


The written statement of a contract effecting insurance. This statement includes all clauses, riders and endorsements.

Policy Anniversary

The annual date which separates the experience under a policy between one period of time and the next for dividend and rate purposes.

Policy Dividend

The return of a portion of the premium paid on a participating policy. It represents the difference between the gross premium charged and the actual cost assessed against the policy.

Policy Loan

A loan made by an insurer to a policy owner. Part or all of the cash value of the policy is assigned a security for the loan.

Policy Owner

The person who has ownership rights to an insurance policy. This person may or may not be either the policyholder or the insured.

Policy Year

The period between policy anniversary dates.


The person in actual possession of the insurance policy.

Pre-existing Condition

A physical condition that existed prior to the effective date of the policy. In many health policies, these are not covered until after a stated period of time has elapsed.


The periodic payment required to keep a policy in force.

Premium Notice

Notice of premium due, sent out by the insurer to an insured.

Premium Payment Method

The mode of premium payment elected by the policy owner. Methods generally available are monthly, annually, or biweekly payroll deduction.


The amount an insurance provider is obligated to pay under the terms of a policy when the policy is surrendered or when the insured dies.

Reduced Paid Up Insurance

A form of insurance available as a nonforfeiture option. It provides that the cash value of the policy be used as a single premium to purchase paid-up insurance in whatever amount the cash value will provide.


A decrease in the benefits in an insurance policy due to a specified condition.

Revocable Beneficiary

The beneficiary in a life insurance policy in which the owner reserves the right to revoke or change the beneficiary.


Restoration of a lapsed policy.

Risk Rate

A premium amount set by the board of trustees. The rate is determined according to the insured's sex and attained age.

Settlement Option

A choice of payment to the beneficiary upon the settlement of a policy. Typical options are interest, installments, life income with a specified number of years, or fixed income as long as proceeds and interest will last.


The period of time for which a policy or bond is issued.

Term Insurance

The type of life insurance policy that provides protection only for a specified period of time. The policy does not build up any of the nonforfeiture values associated with whole life policies.


The time the coverage under an insurance policy ends, either because its term has expired or because it has been canceled by either party. Whole life policies are terminated if the holder ceases to pay premiums. The insured would then receive one of the nonforfeiture values.


A rider excluding liability for a stated cause of injury of sickness, a provision or rider agreeing to waive premium payments during a period of disability of the insured; the act of giving up or surrendering a right or privilege that is known to exist.